Andy Morriss and Don Boudreaux explain the consequences of the fragmented market for gasoline in the United States (gated):

For most of the 20th century, the United States was a single market for gasoline. Today we have a series of fragmentary, regional markets thanks to dozens of regulatory requirements imposed by the federal Environmental Protection Agency (EPA) and state regulators. That's a problem because each separate market is much more vulnerable than a national market to refinery outages, pipeline problems and other disruptions. ...

The role of regulators in fuel formulation has become increasingly complex. The American Petroleum Institute today counts 17 different kinds of gasoline mandated across the country. This mandated fragmentation means that if a pipeline break cuts supplies in Phoenix, fuel from Tucson cannot be used to relieve the supply disruption because the two adjacent cities must use different blends under EPA rules.

To shift fuel supplies between these neighboring cities requires the EPA to waive all the obstructing regulatory requirements. Gaining permission takes precious time and money. Not surprisingly, one result is increased price volatility.

Another result: Since competition is a key source of falling gas prices, restricting competition by fragmenting markets reduces the market's ability to lower prices.

While most of the fuel standards were adopted in the name of the environmental protection, many are actually the result of special interest pleading. Producers of various products, ethanol in particular, sought fuel content mandates or performance requirements that would benefit their particular product. (I detailed part of this history in “Clean Fuels, Dirty Air,” in Environmental Politics: Public Costs, Private Rewards (Greve & Smith eds. 1992).) Worse, some of the content requirements are irrelevant for new cars due to modern pollution control equipment. Federally imposed boutique fuel requirements have outlived whatever usefulness they ever had.

The market for gasoline is often characterized as a Bertrand oligopoly because of the standardized nature of the product. In Bertrand markets, because there is no product differentiation, firms compete in price, driving price down to marginal cost. That's a good approximization when we're talking about local/state gasoline markets, but not when we have a market that's fragmented because of regulatory differences between states that results in product differentiation. Because of the fragmentation, gasoline providers between states are not selling identical products and that reduces the price competition in the market. We would expect to see the biggest difference in prices between gasoline stations near state borders, especially with wildly different regulations that result in a lot of product differentiation.

My family and I travel to northern Iowa a lot, and it is always the case that gasoline prices in stations in Iowa are a dime to fifteen cents cheaper than across the border in Minnesota (I'm going from memory here). Part of that is no doubt due to tax differences, but it could also be due to differences in regulation.

Orbitz Worldwide Inc. has found that people who use Apple Inc.'s Mac computers spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see.

...Orbitz found Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts, a significant margin given the site's average nightly hotel booking is around $100, chief scientist Wai Gen Yee said. Mac users are 40% more likely to book a four- or five-star hotel than PC users, Mr. Yee said, and when Mac and PC users book the same hotel, Mac users tend to stay in more expensive rooms.

"We had the intuition, and we were able to confirm it based on the data," Orbitz Chief Technology Officer Roger Liew said.

I use Windows machines, so I guess I'm OK. But there's more.

Apple users already stand out as big spenders. Nearly half of retailers in a recent study by Forrester Research and Shop.org said users of tablets—a large majority of which are iPads—tend to place bigger online orders than users of laptops or desktops. Shoppers on Apple devices like iPhones also outspend shoppers using Android or BlackBerry devices, accounting for half of all mobile purchases, according to International Business Machines, which tracks data from retailers.

Why? It might be income differences (assuming hotel stays are normal goods).

The average household income for adult owners of Mac computers is $98,560, compared with $74,452 for a PC owner, according to Forrester.

This is just another example of third degree price discrimination because Orbitz has successfully separated consumers into groups based upon the computer they use. This will undoubtedly upset some Apple users, so it will be interesting to see how the competition responds.

***Update: After thinking about this and talking with some friends, I'm now convinced this is not an example of price discrimination of any kind. To be price discrimination, different people have to pay different prices for the same product and the differential cannot be cost-based. Orbitz is giving customers search results based upon the price of the hotel rooms and the computer used in the search. It is not charging different prices to different consumers, but it is giving them different products (the search results) based upon a signal (the computer used in the search) that identifies the type of hotel the customer may want (pricy or budget).

Will this rub some customers the wrong way? Maybe, but not necessarily (and maybe not likely). If a person uses the room price as a signal of room quality and the person prefers higher quality to lower quality, then giving the person more costly hotel room options at the top of the search results would provide him/her with a better list. The person won't even consider staying in budget hotels, so why bother listing them and essentially making the customer filter through them?

Here's an interesting article authored by C.W. Nevius (ht Craig Newmark) on rent controls in San Francisco. The gist of the article is that "the rich" still end up getting apartments and sometimes end up profiting from them because of the way the rent control laws are structured.

Well-to-do people are taking advantage of the city's long-protected practice of limiting rent increases to preserve affordable housing by using their cheap apartments as weekend getaways.

Attorney Andrew Zacks represents landlords who work with the city to push out these cheaters. He says these tenants are cynically playing the system.

"You have this class of very rich, elite people benefiting from rent control," he said. "They have a good deal on a $500 or $800 place on Nob Hill and they use it as a pied-a-terre when they come into the city."

In cases where landlords believe that renters don't use their apartments as permanent residences...

"The burden of proof is on the landlord," said Zacks. "We almost always hire a private investigator, which costs several thousand dollars."

Since the legal system is tilted against landlords, and assuming that the equilibrium price of apartments is above the rent controlled price, we'd expect smart renters to cash in in one way, shape, or form.

"People are hoarding the units," he said. "You have these beautiful homes being used for storage."

Presumably at rental rates less than the rental rates for storage units. Score 1 for the renters (and -1 for the storage unit owners).

Or to turn a profit. As documented in a Chronicle story on Sunday, the recent influx of travel sites like Airbnb, which allow people to rent out units for short periods of time, can allow these renters to both get a place at a bargain rate and make money.

Renters 2, landlords 0.

New says the experience can be surreal for rental property owners.

Surreal to landlords, but not to economists. It's not surreal to economists because what's being described in this article is something touched on in every Principles of Microeconomics textbook that covers price ceilings and the Coase Theorem (all of them to my knowledge). Effective price ceilings cause shortages and the distribution of property rights determines the distribution of income.

The market has so many things to love: fresh and nutritious local foods, beautiful handmade crafts, face-to-face interactions with the farmers who grow your food, scrumptious breads, jams, jellies, and cheeses made by community members, meat and eggs from local farmers, and of course the friendly social atmosphere of "Boone's Town Square."

I had purchased steaks from the $5 vendor a month ago and they were good, but I wondered if there was a quality premium reflected in the price since there were no locational or much in the way of transportation differences. I decided to ask someone who ought to know who I should purchase from and s/he said to get the $5/lb pound. Perfect!

At the other end of the L was another vendor whose grass-fed ground beef was priced at $6.75/lb. I'll be checking for convergence the next time I go.

The description of the professor's farmer's market sounds an awful lot like the farmer's market in Mankato, including the price divergence of seemingly perfect substitutes. But I don't recall ever seeing meat for sale at ours. I don't know why that is, but at that price it probably wouldn't matter, at least for ground beef. I buy virtually all my ground beef from a local butcher in Mankato and I pay around $3.89 per pound. I don't know if the cattle were "grass fed" or even what "grass fed" precisely means. I also don't know all the ins and outs of the price of ground beef set by my butcher relative to the sellers at the professor's farmer's market. But I know the ground beef I buy is damn tasty. And cheaper. Yay!